{"id":74115,"date":"2021-04-26T08:00:29","date_gmt":"2021-04-26T08:00:29","guid":{"rendered":"https:\/\/www.aihr.com\/?p=74115"},"modified":"2026-03-19T21:33:29","modified_gmt":"2026-03-19T21:33:29","slug":"ethical-culture-in-organizations","status":"publish","type":"post","link":"https:\/\/www.aihr.com\/blog\/ethical-culture-in-organizations\/","title":{"rendered":"5 Ways HR Can Shape a More Ethical Culture in Organizations"},"content":{"rendered":"

Business leaders<\/strong> are looking to a new era of ethical and responsible business. Going forward, the right thing to do must be routinely informed not only by the law but by their companies\u2019 own values and principles. What constitutes an ethical culture in organizations and why is it essential? And how can HR contribute to building an ethical organizational culture?<\/p>\n

The recently published Ethics Study<\/a> led by Principia in collaboration with a network of partners including the International Chamber of Commerce, shows growing commitment by CEOs to integrating purpose, ethics, and values across their organizations.<\/p>\n

But the study based on conversations with more than 80 business leaders, together with a survey of a further 750 companies worldwide, also reveals a clear understanding of the scale of the challenge. Take just one example: 94% of leaders surveyed believe that to be an ethical organization, their company must ensure an inclusive culture that creates opportunity for all. But just 45% have a diversity and inclusion program, and just 38% have established formal targets.<\/p>\n

This recurring gap between aspiration and action is one of the clearest insights of the research. However, CEOs also expressed how the impact of the pandemic has strengthened their resolve to close these gaps. As business leaders face increasingly difficult decisions on the right thing to do, the case for building an ethical organizational culture has never been stronger.<\/p>\n

What is an ethical culture in organizations?<\/h2>\n

By \u201cethical culture in organizations\u201d, we mean an environment defined by a sense of common purpose, in which people routinely consider the impact of their decisions. They seek to do the right thing by the company, their colleagues, their customers, and the communities in which they operate.<\/p>\n

Organizations should strive to embed ethics into every aspect of shaping the cultural environment in which their people operate. An ethical culture is not merely one in which people obey the rules. The continuing prevalence of \u201cethics and compliance\u201d teams may suggest that being ethical is simply a case of following applicable laws and regulations.<\/p>\n\n\n

But the reality of ethical organizational culture is more complex. The law can only guide us on black-and-white considerations of what we can<\/em> do. On the contrary, ethics guides us in grey areas towards decisions on what we should<\/em> do. An ethical culture is one in which employees consider the impact of their organization\u2019s decisions on society and the planet. They feel empowered to challenge superiors, and openly discuss \u201cgrey area\u201d decisions about the right thing to do.<\/p>\n\n\n\n

HR plays an instrumental role in shaping organizational culture and building an inclusive work environment<\/a> through their involvement in the whole employee lifecycle; from recruiting through onboarding and training to post-employment. HR helps promote ethical culture in organizations through strategic interventions as well as everyday actions. In short, building an ethical culture is a key priority for HR.<\/p>\n\n\n

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Why is an ethical culture in organizations important?<\/h2>\n\n\n\n

Take one of the most egregious examples of unethical practice from the subprime crisis, as banks sought to foreclose on customers\u2019 mortgages \u2013 such as that of 90-year-old Ossie Lofton<\/a> \u2013 often for negligible payment arrears. At every stage of the chain, the bankers involved might say that they obeyed all applicable laws, regulations, and processes. But the result was clearly suboptimal for both the banks and their customers and society as a whole.<\/p>\n\n\n\n

n an organizational culture more attuned to the ethical implications of their decisions, might someone have raised a hand? Might someone have questioned not simply whether the bank could foreclose, but whether they should?<\/p>\n\n\n\n

In an era of radical transparency, as societal expectations on companies rise, ethical culture will be more critical than ever before. Shaping the capabilities and motivations of their people will enable leaders to have confidence that, even in challenging circumstances, their organizations can reliably and consistently do the right thing.<\/p>\n\n\n\n

How can HR shape ethical organizational culture?<\/h2>\n\n\n\n

The Ethics Study shows that CEOs believe translating aspiration into action will partly depend on establishing the systems that enable people at every level to take ethics into account in the course of their day-to-day work.<\/p>\n\n\n\n

But leaders are also clear that building the right structures and processes will not be sufficient. Fulfilling their vision will require a wholesale cultural transformation<\/a> of their organizations.<\/p>\n\n\n\n

Transforming the culture of an organization is no easy task. The attitudes, mindsets, and behaviors we take for granted are often deeply embedded and difficult to change. But shaping a more ethical organization demands that leaders pay greater attention to the capabilities and motivations of their people. This regards their ability to identify ethically charged decisions and their willingness to prioritize the interests of the company, or the wellbeing of customers, over personal gain.<\/p>\n\n\n\n

1. Assess and quantify the current state of ethical culture<\/h3>\n\n\n\n

HR teams have devoted significant time and attention to enhancing the measurement and monitoring of culture. Realizing that traditional engagement surveys are insufficient in providing insight, a lot of teams have built new capabilities through broader surveys, regular pulse checks, and behavioral monitoring tools.<\/p>\n\n\n\n

But for many, the result is a complex, fragmented, and burdensome array of uncoordinated metrics. And while traditional HR metrics<\/a> may provide a starting point in assessing the strength of ethical culture, they are unlikely to be sufficient. To meet expectations, HR leaders will need to understand how a broader range of cultural factors translates into business outcomes.<\/p>\n\n\n\n